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Petitioner relies on the same passages from the legislative
history previously quoted to argue that the regulation at issue
exceeds the Secretary’s authority. First, with respect to the
example cited in the legislative history, petitioner argues that
the passage indicates that Congress authorized regulations to
cover only the situation set out in that example; i.e., where the
amount owed to the foreign person is neither U.S. source nor
effectively connected income. According to petitioner, Congress
did not authorize regulations covering amounts owed that are U.S.
source income, as in the instant case.
Petitioner effectively reads “for example” as used in the
committee reports as denoting the exclusive scenario in which the
regulatory authority was intended to operate. We think this is
at best a strained reading of “for example” and that the ordinary
usage of that phrase does not suggest exclusivity. Regardless of
whether petitioner or respondent (with whom we happen to agree)
has the better interpretation of the passage, we conclude that
respondent’s construction, as embodied in the challenged
regulation, is a permissible one. Under the Chevron doctrine,
that settles the matter. Respondent’s interpretation of the
regulatory authority granted in section 267(a)(3) is reasonable
in light of the legislative history and therefore is entitled to
8(...continued)
payor and apply section 267(a)(2) where such payee has a U.S.
method of accounting for the item.
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